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SOCIAL SECURITY: A COMPARATIVE STUDY BETWEEN
INDIA, CHINA AND USA
Written by Harshit Hassanwalia* & Shivani Dewalla**
* 4th Year BA LLB (H), Amity Law School , Noida
** 4th Year BA LLB (H), Amity Law School , Noida
India’s social security system is a composition of a various schemes and programs spread
through a variety of laws and regulations and government-controlled social security system in
India applies to only a small portion of the population.
This is generally accepted concept of the social security system includes not just an insurance
payment of premiums into government funds (like in China), but also lump sum employer
obligations.
Meaning
The term social security refers to programmes established by statute that ensure individuals
against interruption or loss of earning power and for certain special expenditures arising from
marriage, birth or death. This also includes allowances to families for support of children.1
The Oxford Dictionary defines social security as money provided by the state for people with
little or no income.
In the Black Laws Dictionary it is defined as “ A federal law, originally enacted in 1935 in
response to the Great Depression, creating a system of benefits, including old-age and survivor
benefits and establishing the Social Security Administration2”.
International Labour Organisation defines social security as “Security that society furnishes
through appropriate organisations against certain risks to which its members are exposed.”
1Social Security Programmes throughout the world : Asia and the Pacific , 2012. 2LII: FEDERAL LAW COLLECTION | LII / LEGAL INFORMATION INSTITUTE
https://www.law.cornell.edu/federal (last updated March. 1,2016 ).
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Hence they are measures establishes by legislation to maintain individual or family income or
to provide income when some or all sources of income are disrupted or terminated or when
exceptionally heavy incomes in bringing up children or paying for health care has to be
incurred. It may be provided in the form of cash benefits to persons facing disability and
sickness, unemployment, crop failure, loss of the marital partner, maternity, responsibility for
the care of young children or retirement from work.
It may be provided in kind as medical need, rehabilitation, and domestic help during illness at
home, legal aid or funeral expenses. Some examples are –
(i) Court order – to compensate accident victims
(ii) By employers – using insurance companies
(iii) By central or local government departments
(iv) By semi-public or autonomous agencies.
Origin
Before the state assumed social responsibility for its citizens it was provided as poverty relief
and protection against economic insecurity through a number of private institutions.
The origin of the concept could be traced back to US where Abraham Epstien used it in
connection with his group American association for social security. The concept originally with
the idea of retirement benefit to primary workers3.
Some countries such as the UK adopted “poor laws” for destitutes were unable to obtain
assistance from their families only to humiliate the downtrodden through loss of civil rights
and removal to poor houses leading to separation of husband and wife.
The industrial proved to be a major catalyst in formation of the concept of social security as
under the capitalist system workers were stripped off their humanity as they remained
unemployed for long time without any insurance against risk of work injuries , sickness or
unemployment.
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Hence the social security system emerged as an attempt to humanise the ravages inflicted by
capitalist system.
A contributory system of unemployment insurance introduced in Britain in 1911 was confined
initially to just three trades-engineering, shipbuilding, and building and construction. After
World War I, the unemployment insurance system was significantly expanded to other
workers. During the years between the wars, in which there was mass unemployment, a
two-tiered system emerged:
(i) unemployment benefits were available as of right for those with insurance
(ii) means-tested social assistance for those without insurance.
A distinction was created between those claiming social security benefits as of right and those
claiming because of need. This also tracked a pervasive public perception relating to the
"deserving" versus the "undeserving" poor.
The development of social security systems in Britain and the United States (and other coun-
tries in this tradition) must be viewed against the backdrop of a political commitment to the
market mechanism for resolving problems of unemployment and poverty coupled with a deep
suspicion of state intervention in market dynamics for social purposes.
The social assistance systems developed in these countries were designed to provide a
minimum of social security to the most needy. Entitlement to assistance depended on the
applicant demonstrating sufficient neediness by passing a means test.
The aim of the Scandinavian countries was to reduce the inequalities and injustices produced
by the capitalist system. It proceeded from the basis that all people have certain "social
rights." The state is obliged to provide and protect these rights through providing universal
access to certain basic social benefits.
The impetus for the expansion of social security in the United States came from the Great
Depression in the 1930s and World War II. The Social Security Act of 1935 introduced pro-
grams to meet the risks of old age, death, disability and unemployment. The main emphasis of
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the US social security system was to promote the security of workers through social insur-
ance.4 However, the act also made provision for federal subsidies to support social assistance
programs in the states.
Types
Three broad approaches are followed under income- maintenance programs-
(i) Employment Related
(ii) Universal
(iii) Means Tested
Under both employment related and the universal approaches the insured dependents and
survivors can claim the benefits as a matter of right. Under means tested approaches benefits
are based on a comparison of a person’s income or resources against a standard measure.5
COMPONENTS
Social security systems in many developed countries consist of a combination of two major
programs:
(i) Social insurance
(ii) Social assistance.
Characteristics of social insurance programs
They are financed by contributions.
They generate "earned" benefits for workers and their families.
They provide for various contingencies that interrupt or stop earnings (such as illness,
old age, maternity and unemployment).
Characteristics of social assistance programs
They are non-contributory and met from general revenues.
4LII: FEDERAL LAW COLLECTION | LII / LEGAL INFORMATION INSTITUTE
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They are designed to supplement the incomes of particularly vulnerable groups (elderly
and disabled). In some countries they provide a "safety net" for those who are not able
to access social insurance benefits.
The benefits and eligibility conditions vary from country to country. The benefits may
be either in cash or in-kind in the form of food aid. The schemes include "income
replacement schemes" or "cost compensation schemes" that provide complete or partial
compensation for family care, health care, funeral costs, etc.
In developed countries social security schemes exist side by side with various private
arrangements made by people to protect themselves against certain contingencies. These
include private savings, private insurance and pension funds. 6
SOCIAL SECURITY AS GUARANTEED BY DIFFERENT INSTRUMENTS –
(i)Universal Declaration of Human Rights (UNDHR)
a) Art 22 guarantees right to social security
b) Art 25 recognises the right of everyone to security in the event of unemployment ,
sickness, disability, widowhood, old age and other lack of livelihood in
circumstances beyond his or her control7.
(ii)International Covenant on Economic, Social and Cultural Rights (ICESCR)
a) Art 9 recognises the right of everyone to social security
b) Art 10 (2) recognises the right of working mothers “to adequate social security
benefits.”
c) Art 10 (3) requires states parties to undertake special measures of protection and
assistance for children and young persons.
d)
(iii) Convention on the elimination of all kinds of discrimination against women
a) Art. 11(1)(e) obligates states parties to eliminate discrimination against
women in the field of employment, and to ensure equal rights between men and
women, in particular . . . the right to social security, particularly in cases of
6 Circle of rights : ESC rights activism a training resource.
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retirement, unemployment, sickness, invalidity and old age and other incapacity
to work, as well as the right to paid leave.
b) Art. 11(2)(b) requires states parties to adopt appropriate measures to introduce
social benefits during maternity leave8.
c) Art. 14(2) recognizes the duty of states parties to eliminate discrimination against
women in rural areas, and, in particular, to ensure to such women . . . the right to
benefit directly from social security programs
(iv) Convention on the rights of the child
a) Art. 26, recognizes for every child the right to benefit from social security,
including social insurance.
b) In addition, Art. 27(1) recognizes the right of every child to a standard of living
adequate for the child’s physical, mental, spiritual, moral and social
development.
c) Under Art. 27(2) and (3), states parties must, in accordance with national
conditions and within their means, take appropriate measures to assist parents
to implement this right and shall in case of need provide material assistance and
support programs, particularly with regard to nutrition, clothing and housing.
(v) American declaration of rights and duties of a man.
(a) Art. 16 recognizes the right of every person to social security "which will protect
him from the consequences of unemployment, old age, and any
(b) Protocol to the American Convention on Human Rights in the Area disabilities
arising from causes beyond his control and make it physically or mentally im-
possible for him to earn a living."
(c) Art. 9 of the Additional of Economic, Social and Cultural Rights
(vi) International Labour Organisation.
(a) Convention No. 102 on social security ( minimum standards ) recognises the
following nine specific branches of social security –
Medical Care
8LII: FEDERAL LAW COLLECTION | LII / LEGAL INFORMATION INSTITUTE
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Sickness Benefits
Unemployment Benefits
Old-age Benefits
Unemployment Injury Benefits
Family Benefits
Maternity Benefits
Invalidity Benefits
Survivors Benefits
Minimum requirements are stipulated as to the coverage of the population,
the content level of benefits, the protection of rights of contributors and
beneficiaries and matters of administration.
Other relevant ILO Conventions are:
Maternity Protection Convention (Revised), 1952 (No. 103);
Equality of Treatment (Social Security) Convention, 1962 (No. 118) (concerning
equality of treatment of nationals and nonnationals);
Employment Injury Benefits Convention, 1964 (No. 121);
Invalidity, Old Age and Survivors’ Benefits Convention, 1967 (No. 128);
Medical Care and Sickness Benefits Convention, 1969 (No. 130);
Maintenance of Social Security Rights Convention, 1982 (No. 157);
Employment Promotion and Protection against Unemployment Convention, 1988
(No. 168)9.
SOCIAL SECURITY: INDIAN PERSPECTIVE
A comprehensive social security scheme must be designed in order to overcome the obstacle
of want, disease, ignorance, squalor and idleness.
Also the schemes must –
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(1) Guarantee income in case of involuntary loss of large or all part
of income from work.
(2) Be initiated by legislation that define obligation upon public or
other organisation.
(3) Be administered by public or private organisations.
(4) Assure that benefit will be available when required and quantity
will be adequate.
The need for social security is in the roots of poverty.
India is one unique example of non-institutional form of social security whichform the
backbone of the current social security system. Joint Family culture being an example in which
needy and unfortunate ones are protected this include members suffering due to unemployment,
economic difficulty, old age, widowhood etc.
Thus India has had its own social security system from the ancient ages in the form of –
(a) Self-sufficient village economy
(b) Caste system
(c) Joint family
(d) Organisation for charity 10
Pre – Independence Era
India can aptly be defined as a country where economic resources are less but needs are more.
As discussed earlier the social security schemes were only restricted to the organised working
classes hence here too we see that the labour laws which now are a part of the public law was
originally a private law.
With the dawn of factory system in India in 1850 factories saw workers working in awful
conditions11. The timeline shows that changes had happened- in 1859 (Indian Merchant
Shipping Act was passed); 1860 (Employees and workmen dispute Act); 1881(Indian Factory
10Mamuria and doshi , Labour problems and social welfare in India, KitabMahalpvt.Ltd. Allahbad (1966) pg.
339. 11LII: FEDERAL LAW COLLECTION | LII / LEGAL INFORMATION INSTITUTE
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Act); 1892 (Island Emigration Act); 1901(India Mines Act); 1919ILO established – aimed at
welfare of workers globally; 1919 (Montague- Chelmsford reforms); 1923 (Workmen
Compensation Act); 1925 (Provident Fund Act); 1929Royal Commission on labour appointed;
1935 (Government of India Act); 1943Standing Labour Committee.
Post-Independence Era
The timeline shows that changes had happened in -
(i) 1947 - Interim Government – included welfare plan for labourers in 5 year plans
(ii) 1947 - Industrial Disputes Act including Gratuity as legal right.
(iii) 1948 - Employers State Insurance Act
(iv) 1948 - Coal Mines Provident Fund and Bonus Scheme Act
(v) 1948 - Employees State Insurance Act
(vi) 1948 - Employees Provident Fund and Misc Act
(vii) 1949 - Payment of Gratuity Act
(viii) 1952 - Employees provident fund Act was passed
(ix) 1954 - India adopted a socialistic pattern of society .
(x) 1961- Maternity Benefit Act
Legal Framework
The Preamble declares that India would be a sovereign, socialist, secular democratic republic
and secure to all its people’s justice, liberty, equality and fraternity.
(I) Concurrent List- Social Security and labour welfare falls under Concurrent list, it
means both union and state Government can make laws regarding these topics.
a) (List III in the Seventh Schedule of the Constitution of India)
b) Item No. 23
c) Social Security and insurance,
d) Employment and unemployment.
e) Item No. 24
f) Welfare of Labour including conditions of work,
g) provident funds,
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h) employers’ liability,
i) workmen’s compensation,
j) Invalidity and old age pension and maternity benefits
(II) Part IV – DPSP
i. Article 38 (i)
Directs state to promote the welfare of people by securing and protecting as efficiently
as it may a social order in which justice – social , economic and political shall inform
all institutions of national life.
ii. Article 38 (ii)
The 44rth amendment added clause (2) which directs the state to minimise the
irregularities in income and to endeavour to eliminate inequalities in status, facilities
and opportunities not only amongst individuals but also group of people residing in
different vocations12.
iii. Article 39
Lays down certain specific objectives clauses (a) , (b) and (c) particularly lay down the
norms for an egalitarian operation of economic and social system of the country.
iv. Article 41
(a) Right to work, to education and to public assistance in certain cases
(b) State shall, within the limits of its economic capacity and development, make
effective provision for securing the right to work, to education and to public
assistance in cases of unemployment, old age, sickness and disablement, and in
other cases of undeserved want.
v. Article 42
(a) Provision for just and humane conditions of work and maternity relief
(b) State shall make provision for securing just and humane conditions of work and for
maternity relief.
(III) Social Security Laws in India
(a) Employees’ State Insurance Act, 1948 (ESI Act).13
12LII: FEDERAL LAW COLLECTION | LII / LEGAL INFORMATION INSTITUTE
https://www.law.cornell.edu/federal (last updated March. 1,2016 ). 13INTRODUCTION TO THE SOCIAL SECURITY SYSTEM IN INDIA http://www.ecovis.com/focus-
china/overview-chinas-social-security-system/ (last updated March. 8,2016 ).
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(b) Employees’ Provident Funds Act, 1952.14
(c) Workmen’s Compensation Act, 1923 (WC Act).15
(d) Maternity Benefit Act, 1961 (M.B. Act)
(e) Payment of Gratuity Act, 1972 (P.G. Act).16
Recognizing the need of providing social security to unorganised workers, irrespective of their
informal or formal capacity, the Government has enacted the Unorganised Workers’ Social
Security Act 2008.17
The Act provides for constitution of National Social Security Board to recommend social
security schemes viz. life and disability cover, health maternity benefits, old age protection and
any other benefit as may be determined by the Government for unorganized workers.
The Government launched the RashtriyaSwasthyaBimaYojana for BPL families (a unit of
five) in unorganized sector on 01.10.2007. The scheme providing forsmart card based
cashless health insurance cover of Rs. 30,000/– per family per annum on a family floater
basis, became operational form 01.04.2008. More than 2.51 crore families have been covered
under the scheme as on 31.10.2011.
To provide death and disability cover to rural landless households between the age group of
the 18 to 59 years, the Government launched the ‘AamAdmiBimaYojana’ on 02.10.2007
More than 1.78 crore lives have been covered under the scheme as on 31.07.2011.18
Indira Gandhi National Old Age Pension Scheme provides for old age pension of Rs.200
per month to persons above the age of 60 years. For the persons above the age of 80 years the
amount of pension has been raised to Rs.500 per month.19
14INTRODUCTION TO THE SOCIAL SECURITY SYSTEM IN INDIA http://www.ecovis.com/focus-
china/overview-chinas-social-security-system/ (last updated March. 8,2016 ). 15INTRODUCTION TO THE SOCIAL SECURITY SYSTEM IN INDIA http://www.ecovis.com/focus-
china/overview-chinas-social-security-system/ (last updated March. 8,2016 ). 16http://mrunal.org/2012/07/economy-social-security-epfo.html#28. 17LII: FEDERAL LAW COLLECTION | LII / LEGAL INFORMATION INSTITUTE
https://www.law.cornell.edu/federal (last updated March. 1,2016 ).
18INTRODUCTION TO THE SOCIAL SECURITY SYSTEM IN INDIA http://www.ecovis.com/focus-
china/overview-chinas-social-security-system/ (last updated March. 8,2016 ). 19LII: FEDERAL LAW COLLECTION | LII / LEGAL INFORMATION INSTITUTE
https://www.law.cornell.edu/federal (last updated March. 1,2016 ).
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The Government is implementing various other employment generation/social security
schemes for workers in the unorganised sector, such as
Swarnjayanti Gram SwarojgarYojana
SwarnJayantiShahariRojgarYogana
Prime Minister’s Employment Generation Programme
Mahatama Gandhi National Rural Employment Guarantee Act, 2005
Handloom Weavers’ comprehensive Welfare Schemes
Handicraft Artisans’ comprehensive Welfare Schemes
Pension to Master craft persons
National Scheme for Welfare of Fishermen and Training and Extension
JananiSurkashaYojana
National Family Benefits Scheme
JanshreeBimaYojana New Pension Schemes (Swavalamban scheme) through various
Ministries/Departments.20
Why is India Lagging behind?
We do not have an existing universal social security system
92% of the workforce is in the informal sector which is largely unrecorded
today 1/8th of the world’s older people live in India. The overwhelming majority of
these depend on transfers from their children.
Addressing social security concerns with particular reference to retirement income for
worker
In India the coverage gap i.e. workers who do not have access to any formal scheme for
old-age income provisioning constitute about 92% of the estimated workforce of 400
million people.
CHINA’S SOCIAL SECURITY SYSTEM
China’s social security controlled by the central government but its administration and specific
details are governed by local authorities. For example, employer and employee contribution
20http://indiamicrofinance.com/list-social-security-schemes-workers-india.html
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rates and caps for each benefit vary according to local jurisdiction and are subject to annual
changes and reforms.21
The contribution to China’s social security system is mandatory for Chinese employees and
their employers as well as foreigners employed in China, except for foreigners in Shanghai.22
Employers and employees must pay monthly premiums into three of the funds (pensions,
medical expenses, unemployment) while employers in addition are required to make
contribution to the last two (maternity and work-related injuries).
Self-employed individuals, part-time employees who do not participate in the social security
schemes through their employers, and unemployed individuals can participate in the pension
and medical insurance schemes on merely a voluntary basis.23
Types of insurances in China
1. Pension –Generally speaking, individuals need to make contributions for a minimum
of 15 accumulative years before claiming pension. The retirement ages differ for certain
industries but mostly lie at 55 years for men and 50 years for women (in the case of
blue-collar work) or 60 years for men and 55 years for women (in case of white-collar
work). The amount of retirement benefit depends on local regulations. The ages will
likely change soon due to China’s demographic problem.
When a foreigner leaves China prior to the stipulated age for receiving pension, his
individual account will be retained. If the foreigner later re-enters China for further
employment, the payment period will continue to be calculated on a cumulative basis.
Upon written application by the foreigner, the social insurance agency can pay the
foreigner the amount in his individual account in one lump sum and terminate the basic
pension relationship. The precondition here is that the employee intends to leave China
for good. Upon the foreigner’s death, the amount remaining in the individual pension
insurance account can be inherited.
21LII: FEDERAL LAW COLLECTION | LII / LEGAL INFORMATION INSTITUTE
https://www.law.cornell.edu/federal (last updated March. 1,2016 ). 22OVERVIEW OF CHINA’S SOCIAL SECURITY SYSTEM INSTITUTE http://www.ecovis.com/focus-
china/overview-chinas-social-security-system/ (last updated March. 10,2016 ). 23OVERVIEW OF CHINA’S SOCIAL SECURITY SYSTEM INSTITUTE http://www.ecovis.com/focus-
china/overview-chinas-social-security-system/ (last updated March. 10,2016 ).
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2. Medical insurance-Both employers and employees are required to make monthly
medical insurance contributions. The medical insurance fund will refund medical
expenses to designated hospitals that carry out the treatment. Patients will no longer
have to pay treatment fees upfront and wait for compensation later.
3. Unemployment insurance-Employers are required to contribute to the unemployment
insurance fund. Regarding employees, only in certain local jurisdictions they are
required to make additional monthly contributions. However, there are no
unemployment benefits for foreigners, as a foreigner no longer working in China will
not be permitted to continue living in China.24
4. Work related injury insurance- Only employers are required to make monthly work-
related injury insurance contributions. The required monthly amount may, in some
jurisdictions, vary according to the respective industry. The insurance generally covers
all work-related injuries and occupational illnesses.25
The work-related injury insurance fund will cover the costs of the treatment. The
employer will still be required to pay some salary to the individual, although it will be
less than full salary. Even if the employer has not made the required contributions, the
individual can still claim the treatment and have it paid for through the insurance fund.
The fund administrator will then be required to follow up on the employer in order to
receive full compensation.26
5. Maternity insurance - Similar to the work-related injury insurance, only employers are
required to make monthly maternity insurance contributions. The monthly payments
from the insurance fund to women during their maternity leave will be based on the
average salary of the women. That means a woman could receive more money during
her maternity leave if she works at a company where other women receive a higher
salary than her. To qualify for these benefits, the female employee’s employer must
already have made monthly fund contributions for three months and the relevant
24LII: FEDERAL LAW COLLECTION | LII / LEGAL INFORMATION INSTITUTE
https://www.law.cornell.edu/federal (last updated March. 1,2016 ). 25OVERVIEW OF CHINA’S SOCIAL SECURITY SYSTEM INSTITUTE http://www.ecovis.com/focus-
china/overview-chinas-social-security-system/ (last updated March. 10,2016 ). 26OVERVIEW OF CHINA’S SOCIAL SECURITY SYSTEM INSTITUTE http://www.ecovis.com/focus-
china/overview-chinas-social-security-system/ (last updated March. 10,2016 ).
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medical treatment must be in compliance with China’s birth control policy. Under
certain circumstance, male employees may also receive benefits.27
America’s Social Security System
Social security provides financial benefits available to virtually all workers in America from
the U.S. Federal Government. Most workers in the United States rely upon Social Security
benefits at some time in their lives. It may be when they retire and collect Social Security
retirement benefits; it may be during their working lives if they become disabled and are unable
to work (and collect Social Security disability benefits); or they may be eligible for Social
Security survivors benefits upon the death of a worker.
Social Security is administered by the Social Security Administration (SSA). The three main
programs that they administer are:
Social security retirement benefits
Social security Survivors benefits
Social security Disability benefits
These three Social Security programs are all funded by payroll tax deductions--that means by
every worker in America. Once you are in the Social Security system, you begin accumulating
credits towards future Social Security benefits. Once you are eligible for Social Security
benefits, you may apply to the Social Security Administration to receive them.
The various benefit schemes are:
1. Social security Child’s benefits - These benefits are paid to a worker's biological child,
adopted child or dependent stepchild. In some cases, the child also could be eligible for
benefits based on his or her grandparents' or stepgrandparent’s earnings.28
2. Social Security Disability Insurance Benefits – This benefit is paid to people who
have earned enough Social Security credits and are unable to work because of a
disability that has lasted or will last for at least 12 months or end in death.
27Benefits.org/your path to governmentbenefitshttp://www.benefits.gov/benefits/browse-by-federal-
agency/federal-agency/9 (last updated March. 1,2016 ). 28OVERVIEW OF USA’s SOCIAL SECURITY SYSTEM INSTITUTE http://www.ecovis.com/focus-
china/overview-chinas-social-security-system/ (last updated March. 10,2016 ).
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3. Social Security Disabled Surviving Divorced Spouse Benefits – These benefits are
paid to the disabled surviving divorced spouse of a worker who had earned enough
Social Security credits. That must be 50 years but not yet age 60.29
4. Social security Divorced Spouse Benefits – These are benefits paid to divorced
spouses of workers who are receiving (or are eligible to receive) Social Security
benefits.In order to qualify for this benefit program, a person must be at least 62 years
old and not currently married.
5. Social Security Independently Entitled Divorced Spouse’s Benefits.
6. Social Security Lump Sum Death Payment - A surviving spouse or child may receive
a special lump-sum death payment. The lump-sum is paid to the surviving spouse who
was living in the same household with the worker when he or she died. 30
7. Social Security Medicare Program - Medicare is a health insurance program for
people who meet the following requirements:are age 65 or older, receive Social
Security Disability benefits, or people with kidney failure may also qualify for
Medicare.
8. Social Security Parent’s Insurance Benefits - These are benefits paid to the
dependent parent of a deceased worker who had earned enough Social Security credits.
9. Social Security Special Benefits for Qualified WWII veterans - Special benefits can
be paid to certain World War II veterans. 31
10. Social Security Spouse’s Insurance Benefits - These are benefits paid to the spouse
of a worker who receives Social Security Retirement or Disability benefits.
Conclusions/Suggestions
In India the lack of a wide social security net has serious implications for well-being of aged,
poor people who are unable to meet their old age needs. India’s workforce is largely based in
unorganised sector where pension provisions are mainly of a voluntary nature. The size of this
sector is a bottleneck in social security provision to the elderly poor in India.
29LII: FEDERAL LAW COLLECTION | LII / LEGAL INFORMATION INSTITUTE
https://www.law.cornell.edu/federal (last updated March. 1,2016 ). 30OVERVIEW OF USA’S SOCIAL SECURITY SYSTEM INSTITUTE http://www.ecovis.com/focus-
china/overview-chinas-social-security-system/ (last updated March. 10,2016 ). 31USA CITIZENS RIGHTINSTITUTE http://www.newdelhi.usembassy.gov/service/other-citizen-
services/social-security.html (last updated March. 10,2016 ).
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This paper examines selected components of the social security system in India and highlight
the following -
India has a larger pool of young population than most of the countries - the existing
population is very young and therefore in the working age group.
Historically, the Indian policy makers have viewed the pension system as a welfare
measure and therefore, it lacks in financial professionalism, diversification, and in the
belief that pension funds can also be treated as an asset
The Indian system is biased towards the organised formal sector as workers in this sector
are benefitted with the provisions under various labor laws. Even then the pension
provisions in India are far behind.
In the unorganised sector, old age income remains mainly confined to voluntary savings.
The New Pension System although makes the pension amount an old age asset, is silent on
the social security provisions to the poor
The average income earners are not able to replace their pre-retirement earnings with
pensions compared to most of the countries
Although the Potential Support Ratio (PSR) is relatively high in India compared to the
countries, such a demographic advantage also necessitates in having social security provision
for the future. With further improvement in life expectancy, the share of old age population
will increase and thus the potential support ratio may decline.